(Bloomberg) — Chinese shares advanced on their return from a five-day holiday, aided by signs of easing trade tensions with the US and data showing resilient domestic consumption.
The onshore benchmark CSI 300 ( 000300.SS ) Index ended 1% higher Tuesday, with telecom and technology names among the top gainers. An index of small-cap stocks rallied 3.3% to close at a one-month high.
The gains came after Treasury Secretary Scott Bessent said the US could see some “substantial progress in the coming weeks” in trade talks with China. That followed President Donald Trump‘s remarks that said he is willing to lower tariffs on China at some point, building on optimism triggered by Beijing’s statement Friday that it is assessing the possibility of trade talks with the US.
Meanwhile, latest data from strong sales at key retail and catering firms to robust holiday traffic results also came as a welcome sign for policymakers seeking to boost consumption to drive future economic expansion. Those appear to have eased concerns about slowing growth after a private gauge showed China’s services activity deteriorated more than expected in April.
“I’m more comfortable with A-share, as I am in the camp that macro is soft but Beijing will put a floor to it if it does get weaker,” said Xin-Yao Ng, a fund manager at Aberdeen Investments in Singapore, referring to mainland-traded stocks. “At least there are signs of thawing” between the US and China, he said, adding that the holiday retail data are also resilient.
A gauge of tech-heavy Chinese equities in Hong Kong erased earlier losses to edge higher, after climbing almost 2% on Friday. Hong Kong was also shut on Monday.
In another sign of broader tourism-induced demand recovery, Macau casino stocks continued their ascent after the sector’s April gaming revenue exceeded expectations.
Onshore stocks have continued to underperform those traded in Hong Kong this year despite signs of support from the so-called national team of state funds. However, those efforts have helped reduce volatility in the mainland market.
“The Labor Day holiday travel and consumption figures are doing quite well, indicating the service consumption growth momentum is still intact,” said Jason Chan, a senior investment strategist at Bank of East Asia. “Moreover, the theme of domestic substitution in tech sector is still a major growth driver for hardware, software and AI cloud companies.”